Tunisia's sovereign debt rating cut

2011-01-19 11:05

Paris - Moody's Investors Service on Wednesday cut Tunisia's sovereign rating debt by a notch, citing the country's political and economic uncertainties after a popular uprising ousted the president.

Moody's, one of the top three international ratings agency, downgraded Tunisia's sovereign debt ratings from Baa2 to Baa3 and changed the outlook from stable to negative, it said in a statement.

It said the downgrade reflected "the country's instability due to a recent unexpected change of regime," with strongman president Zine El Abidine Ben Ali forced to flee to Saudi Arabia last week after 23 years in power.

As a result, there were now "significant uncertainties surrounding both the economic and political outcomes," it said.

A "protracted crisis could potentially be very damaging to the country's economy given its reliance on tourism and foreign direct investment. The recent events will affect fiscal performance and real growth in 2011," it warned.

At the same time, it noted that "Tunisia's moderate level of economic development is underpinned by a long track record of stable and forward-looking economic policies.

"Even though the political landscape has changed, the country's competent civil servants, who have been the backbone of the state, are likely to remain in place for now."

The situation in Tunisia became more confused on Tuesday after four ministers in Tunisia's new unity government pulled out a day after being appointed amid popular rage against the continued presence of the ousted president's party on the political scene.

Thousands protested across Tunisia to call for Ben Ali's Constitutional Democratic Rally (RCD) party to be shut out of the government, with riot police firing tear gas in the capital Tunis.